Financial intermediaries help eliminate inefficiencies such as indirect investment by households.
While intermediaries do reduce inefficiencies, indirect investment by households is not an inefficiency.

Question

Quizplus · Accepted Answer

Indirect investment by households can be a legitimate and efficient way for households to invest their money. Financial intermediaries do provide benefits such as diversification, professional management, and liquidity, but they may also charge fees and commissions that can reduce returns. Therefore, both direct and indirect investment can have their advantages and disadvantages.

Financial Intermediaries Help Eliminate Inefficiencies Such as Indirect Investment by Households